New Home

Do you want a new home? Here are the steps on how to buy your new home. The first question to answer is do you want everything custom from scratch or do you want a home that is already being built in a planned community? The good news is both are obtainable in Tennessee. They each have a few variances that we’ll go through below.

New Home Financing

New home financing is available. If you’re looking to move into a planned community then the builder will have a lender they work with and recommend. This is usually a good first step. It’s a good idea to get quotes from at least three different lenders to make sure you’re getting the best deal.

The financing for a new home in a planned community versus a new home you are constructing ends up being the same. They both require you to submit the lot information and your building plans.

If you’re choosing your own land lot and constructing your own custom home you will submit the land information along with your building plans the same as if it is a home in a planned community. The difference is in providing the sewer and electricity information for your custom lot yourself.

A builder in a planned community will already have all of those details worked out and documented. If you’re wanting to buy your own lot that is not in a planned community then you need to move through a few extra steps.

For a single lot you’ll need to have it perked. This involves getting the soil tested to determine how many bedrooms the lot can sustain for the septic system. If the lot is located near city sewer then you need to submit your building plans to the city to get your sewer permit.

The same applies for electricity. You’ll need to submit your building plan to the city to get the electricity permit.

These permits and documents are then submitted to your lender.

Build New Home Loan

The biggest challenge for most new home buyers is the transition time. Building new requires a longer transition period then buying a house that is already built.

Buying a new home in a planned community gives you a lot more options. There are often new homes in various stages of construction to chose from. If your move time is short then you can pick a home that is new but already built.

There is a work-around to this situation. If you’re a new home buyer that needs to use the proceeds from your current home sale to put into building a new home there are solutions. Lenders have bridge loans that use the equity you have in your current home to finance the construction of your new home.

This is the best case scenario if you don’t have the cash up front to finance your new home construction. The best part about this is that you don’t have to sell your home and move until after your new home construction is complete. This applies to both new homes in planned communities and new home builds on custom lots.

Decide on Location

Understanding the process and availability of financing your new home will allow you to move forward to work on the next biggest decision. The most important factor to buying your new home is location. This is the biggest decision with any real estate purchase. Location, location, location, right?

Building a new home can seem overwhelming. There are more decisions and steps to move through then a normal real estate transaction. However, the payoff is big. You get more personal preferences. You receive a home that has either been completely custom designed by you or partially decided by you. Not to mention that new home smell.

Setting all of the steps aside, the biggest factor in your new home is location. If you already know where you want to have your new home built then the hard part is over. If you don’t, then here is how to find out. Take a tour of both planned communities and individual lots in the area that you like. Here are a few differences when comparing the planned community location and the individual lot location.

Planned Community

The choices you’ll need to make are selecting the lot in the community. After that you decide on the home design if the builder has more than one choice. Then the finishing material selections. Done.

The purchase of the land in a planned community is wrapped into the purchase price of the home.

Individual Land

Have your real estate agent pull a list of land for sale in the area you like. Be sure to put on your cowboy/cowgirl boots. You’ll want to walk the lot to help visualize your new home built on it.

Most lots are not cleared. This means they are full of trees and bushes that won’t be there after you have it cleared. This also means that if you wear high heels you’ll be in trouble. Make sure you also put on your imagination hat. It can be hard to look at an uncleared piece of land and “see” what it will look like in the future with your new home on it.

The land purchase can be financed with cash, an ELOC from your home or a bridge loan. The bridge loan is one of the most popular loans for new home builds right now. It leverages your equity to finance the land purchase and home build.

After construction is complete you can put your old home for sale and move into your new home. As soon as your home sells you can refinance the bridge loan into a longer term loan product such as a 15 or 30 year fixed mortgage.

Final Hoops Before Construction

After you’ve selected the location then it’s time to start the building process.

Planned Community Choices

If you’ve decided to move into a new home community this process is managed for you and is simplified. The decisions will be less and easier. The biggest decision was selecting the lot. After that it’s fairly simple. You will be given options for each construction phase. The builder will supply you with all of your choices.

Typically the initial purchase price included a set of features and choices. As you move through the building process there are often opportunities to include higher quality features and materials along the way. The builder will be happy to add that to the total sale price.

Land Inspection

If you’ve decided on a location that is not in a planned community there are additional steps you’ll need to move through before closing. Your agent should help you move through these in order to ensure you want to complete your land purchase. A professional realtor will know how to draw up your land purchase agreement to give you this option.

Septic or Sewer

This will depend on the location of the land. If the land is within city limits chances are it can be hooked up to city sewer. This will require obtaining a permit.

If the land is not already on a street that has sewer then you’ll need to install a septic system on the property. The first step to doing that is getting a soil perk test. This test will determine how many bedrooms you can have built on the land.

It’s a good idea to have your agent draw up your offer to make it contingent upon the soil test passing to your satisfaction. If you want to build a 5 bedroom house and can only perk for a 2 bedroom house then you could be stuck with a piece of land that cannot hold the size of house you want to build.

Electricity

You’ll need to submit your building plans to the city to get your electricity permit.

House Plan

This is the fun part. You’ll need to select the house design that you want. There are a ton of resources online and many plans you can buy. You can also make a list of house plans that you like and submit those to your builder. Often your builder will have house plans that you can chose from.

The biggest element of the house plan is the floorplan. Be sure to select a house that has a floorplan you really like. Think of how you want the rooms to flow and how you want them organized. Your builder will submit your house plan to the city for permits.

Once those three major custom land development hurdles have been complete you can close the deal! When you have a professional real estate agent and builder helping you through these hurdles they are really not too much more then the planned community route.

Whether you’re thinking you want to buy a new home in a planned community or buy land to build on our team is here to help you every step of the way.